NEW YORK (AP) – The storm surge coverage fund that funds insurance for businesses and homeowners is coming to a halt.
The fund, a federal program for homeowners that was created in 1996, has faced criticism from critics and supporters who argue the program doesn’t provide enough protection for the millions of Americans whose homes were damaged or flooded during Hurricane Sandy.
The storm surge fund was created to fund hurricane-related damages, and it covers a broad range of storm damage, from damage to properties to flood damage, flood-control measures and other property-related losses.
Its funding is capped at $250,000 per home and has been capped at 50 percent of the property value in the most expensive neighborhoods.
That caps were set to expire Wednesday, and the fund’s last-minute extension was announced Wednesday afternoon by U.S. Treasury Secretary Jack Lew.
Lew said the cap was needed to avoid additional spending by the Treasury Department and the federal government.
The program’s administrator, Steven Mnuchin, said the fund would have to close its doors at some point, as it is funded at a “significant and sustained” level.
Mnuchin said the storm fund will be suspended “for a period of time to allow for a review of its viability.”
Mnuchin said in a statement that the fund will continue to support the insurance market for homeowners, and that the Treasury is “confident that it will be able to meet the needs of homeowners for the long term.”
He said the funding for storm surge mitigation and insurance will continue “to be the primary objective” of the program.
“The funds we will be required to provide are essential to the health and safety of the American people,” Mnuchin added.
Trump administration officials and congressional Republicans have argued the program is a way to cover the costs of Hurricane Sandy victims.
But the program has been criticized for being a vehicle for tax breaks and other financial incentives that would not have been available to residents of New York City and other coastal communities if the money had been available.
The Treasury Department said Wednesday that the storm-surge fund will run out of money next week.
Mnuchins office said it will continue its efforts to get more money for the program, but that its deadline will be Jan. 10.